103. Memorandum From the Staff Director of the Senior Interdepartmental Group (Schwartz) to the Under Secretary of State (Katzenbach)1


  • The Hitch Report

Herewith my comments on Bill Crockett’s memorandum to you of November 17 on the same subject.2

Bill recommends that (1) we try out a PPBS for FY69 in Latin America, borrow personnel from other agencies after consulting in SIG, and that Mr. Hitch and his group be asked to continue in an advisory capacity. Bill also suggests that all five regional bureaus be canvassed to determine the most appropriate bureau for the initial experiment. I generally agree with these recommendations with the exceptions noted below.

I see no useful purpose to be served by canvassing the regional bureaus on something which to most of them is both mysterious and malevolent, particularly as ARA is the obvious choice.
I think that Mr. Hitch or some part of his committee such as Dr. Argyris should be asked to serve in the capacity of auditors in reserve [Page 218] rather than on a regular basis. In other words, when we have some ideas which would benefit from their counsel, we can ask for it.
I prefer to think of the ARA experiment as a trial rather than as a first step. I.e., if the trial produces no net gain, I do not believe we should be fully committed to forcing the system on the other bureaus. The gentlemen in O3 have quite a different view, to wit! this system is going to be put into effect world-wide in the next few years whether or not the experiment in ARA is a success.
I believe it would be useful if we agreed—at least among ourselves in this house—that we are talking about a system which is to encompass only those countries where our relations are dominated by the transfer of U.S. resources. In general such a definition would eliminate Canada, Western and Eastern Europe, Soviet Union, Communist China, Japan, Australia and New Zealand. It seems to me that a system where quantification is a highly important ingredient can usefully be applicable only to the less-developed countries to whom we give some sort of assistance. It is this assistance that can be broken down into programs which in turn, hopefully, can be better controlled by the foreign affairs command in Washington through the proposed FA/PPBS. Nothing I have been able to learn about the PPBS makes me believe that it would be helpful in handling problems such as Britain’s chronic foreign exchange deficits, German offset, the reluctance of the Japanese to build up their armed forces, trade with Canada, the loosening of the Warsaw Pact ties, the Kennedy Round, etc. After all, the SIG/IRG system can be an extremely useful device in producing clear cut decisions on interdepartmental problems and disputes whether or not there is an additional system for analyzing and controlling the transfer of U.S. resources abroad.
For the next 12 months it seems to me that the function of any central staff should be to assist ARA with its experiment and to draw conclusions and lessons from that experiment. I would not now set up a central PPBS staff beyond what is already in O to run some world wide machinery which may never come into existence. I do think, however, it is a good idea to borrow a few good personnel from other agencies to help with the ARA experiment.
I do not agree with the belief apparently firmly held in O that country programs must be preceded by a national policy paper for that country. Such documents invariably take too long to produce and just as invariably are filled with statements about “political stability”, “orientation to the West”, “viable economies”, etc. I would simply instruct the Ambassador to state in English prose and in detail the reasons why [Page 219] the United States should give any assistance to his country and to demonstrate how each and every type of assistance in any given amount furthers the interests of the United States. The review, alteration, approval or disapproval of his arguments by the Assistant Secretary or his Regional Group or the SIG or the President would become the policy of the United States toward that country in concrete terms. Further, at the end of the process those American officials could better understand our concrete policy than if they read it in a document with a hard cover.
As a general proposition, and specifically with respect to the ARA FY69 experiment, I would ask the Bureau of the Budget to drop their requirement for a “spring review”. Doing so would shorten the time period between the Ambassador’s recommendation and Executive Branch final action by about five months and thus bring the Ambassador five months closer to reality.
  1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, ORG 1. No classification marking.
  2. Not printed. (Ibid.)
  3. Office of the Under Secretary of State for Administration (Crockett).